Hong Kong stocks rose Friday, halting a four-day drop, as airlines gained after crude oil fell below $100 a barrel, and AIA Group Ltd climbed after reporting better-than-estimated earnings.

Cathay Pacific Airways Ltd advanced 3.6 percent. AIA Group Ltd jumped 5.7 percent. Sun Hung Kai Properties Ltd climbed 2.4 percent after Reuters said the developer and Guoco Group Ltd may invest in a fund to develop Shanghai's waterfront Bund district.

"Markets are rebounding as oil becomes less of a concern," said Chris Leung, a Hong Kong-based fund manager at Haitong International Asset Management, which oversees $600 million. "In the short term I'll increase exposure in Asian stocks. Following the recent correction, the bottom-range valuations look attractive."

The Hang Seng Index (HSI) increased 1.8 percent to close at 23012.37. The gain halted its 4.2 percent decline in the last four days, and pared its decline for this week to 2.5 percent. The Hang Seng China Enterprises Index rosed 1.8 percent to 12270.43.

The HSI has fallen 0.1 percent this year as concerns about tighter monetary policy in China and unrest in the Middle East reduced investor confidence. Shares in the gauge traded at an average 12.4 times estimated earnings, compares with 17.2 times at the start of 2010, according to data compiled by Bloomberg.

Cathay Pacific gained 3.6 percent to HK$17.70. China Southern Airlines Co climbed 0.6 percent to HK$3.55.

Crude oil for April delivery declined 0.8 percent Thursday to settle at $97.28 a barrel on the New York Mercantile Exchange after the US, Saudi Arabia and the International Energy Agency made assurances that they can compensate for any disruption of Libyan shipments. The contract retreated after touching $103.41 Thursday, the highest intraday price since September 2008.

AIA surged 5.7 percent to HK$22.30 after saying full-year profit rose 54 percent to $2.7 billion on increased policy sales and investments. That beat the average estimate of $2.02 billion by nine analysts surveyed by Bloomberg.

Sun Hung Kai, Hong Kong's biggest developer by market value, rose 2.4 percent to HK$124.30. Guoco climbed 1.2 percent to HK$96.90. The companies are potential investors in a 20 billion yuan ($3 billion) fund to develop Shanghai's waterfront Bund district, Reuters reported, citing an unidentified person.

Jiangxi Copper Co rose 3.4 percent to HK$24.05 after China's biggest producer of the metal said its annual tax rate will drop to 15 percent from 25 percent for three years after the company was recognized as a "high-tech enterprise" by the provincial government.

Futures on the HSI gained 1.2 percent to 22920. All but two stocks rose among the measure's 45 constituents. The HSI Volatility Index, the benchmark gauge for Hong Kong stock options, slid 9.5 percent to 19.64.

Bloomberg

(HK Edition 02/26/2011 page3)